US July Manufacturing PMI Beats Forecasts, While S&P Global Warns of Slower Growth

US manufacturing activity remained in expansion territory in July, with both ISM and S&P Global readings topping market expectations. Still, weak new orders and persistent price pressures prompted a warning that growth could slow in the months ahead.

The Institute for Supply Management said Aug. 3 that its July manufacturing purchasing managers index, or PMI, rose to 55.6. That was well above the market forecast of 54.0 and the prior reading of 53.3.

S&P Global's July US manufacturing PMI, released earlier, came in at 53.9. That was slightly above both the market forecast and the previous reading of 53.8. A reading above 50 signals expansion in manufacturing, while a reading below 50 indicates contraction.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said July's PMI remained stable but showed some warning signs for the growth outlook.

New-order growth has stayed weak for three straight months, while the pace of output growth has slowed noticeably, he said. That reflected softer demand after companies built inventories in the second quarter in preparation for tariffs.

Supply-chain delays, weaker exports and consumer resistance to high prices also weighed on manufacturers. Raw-material cost increases eased somewhat, but inflation pressures remained elevated because of energy prices and tariffs.

Optimism about companies' growth outlook fell to the lowest level since October last year, Williamson said. Short-term downside risks to the economy are increasing.